Should You Buy Travel Insurance?

Quick Answer

Consider purchasing travel insurance during your next trip to protect yourself from the costs of trip cancellation or interruption, medical treatment abroad and even emergency evacuation.

Mom and dad are happily holding their daughter as they all wear sunglasses at the amusement park.

With the hopes of an almost-normal summer ahead, travel plans are back on for many people. But traveling may still come with some hiccups, so it's important to consider travel insurance that can protect you financially when a trip goes wrong.

While your homeowners insurance and travel credit card may offer some protections, you may want to add additional coverage by shopping at your current insurer or travel-specific companies to find plans for cancellations, interruptions, health issues and more.

Insurance Available for Travelers

Depending on the cost of your trip, your intended destination and any known potential hazards, you may want to consider one of the following types of travel insurance before leaving home:

Travel Insurance

Comprehensive travel insurance covers things like trip cancellations, interruptions and other mishaps that may come with planning a trip.

Travel insurance may reimburse you for delay-associated costs, for example, like flight delays, meals or hotel stays. Or, if you lose your baggage, it may cover some of the associated costs.

You can purchase a travel insurance policy from a general insurer or, if you have a travel credit card, you can take advantage of the travel protections offered by your card.

Just be sure to check the fine print. Travel insurance often has exclusions that could prevent you from using your coverage such as:

  • Pandemics
  • Pre-existing medical conditions
  • War

Cancel For Any Reason Insurance (CFAR)

The most thorough travel insurance coverage is known as "cancel for any reason," or CFAR, travel insurance. As long as all eligibility stipulations are met, it insures all parts of the trip and does not typically include the same exclusions as comprehensive travel insurance—meaning purchasers can cancel their trip for any reason and get some money refunded. CFAR is available as an add-on to applicable travel insurance purchased from general insurers.

Travelers must purchase CFAR insurance within a maximum of 21 days of booking the trip and a minimum of 72 hours before departing. You won't receive a full refund if something goes wrong, however: CFAR insurance typically covers 50% to 75% of the trip.

Rental Car Insurance

Your credit card may offer rental car insurance coverage as a perk. This can help you save when renting a car because you won't have to buy the policy sold by the rental company.

Credit card rental insurance coverage typically covers a collision damage waiver or loss damage waiver, which may protect you if there is damage caused to the vehicle or it is stolen. You may also get coverage for things like towing as well, depending on the particular credit card's coverage.

To take advantage of rental car insurance, pay for the rental on the credit card with this benefit, and use it for any out-of-pocket damages to the vehicle. Then, file a claim with the credit card provider for coverage.

Health and Life Insurance for Trips Abroad

Your regular health insurance may not extend outside of the country—particularly if you use Medicare or Medicaid—so you may need to sign up for health insurance that will cover you while abroad.

Your current health insurance provider may offer a supplemental plan for international travel, or you can shop around for health plans geared toward overseas travel to see if you can find a better price. Travel medical insurance may require that you already hold a primary health plan, though it does not have to be from the same company.

Luckily, most life insurance policies will follow you wherever your travels might take you. But if you're traveling for an extended period, your policy provider may want to know this so they can assess your risk properly.

Extraction Insurance

Extraction insurance is designed to extract you from serious situations, particularly after an injury or illness away from a hospital, usually in remote locales.

You can purchase an extraction insurance policy from insurers if you are planning something like a hiking expedition. It provides transportation out of the area and to medical assistance. Not only can this help pay for transport out of a location when you are injured, it may also cover medical services you receive that are not covered by your health plan.

Identity Theft Insurance

While traveling, there are a variety of identity theft risks you might encounter, from losing your passport to needing to use your debit card in a foreign ATM. Travelers can benefit from holding identity theft insurance.

Identity theft coverage can be wide-ranging, covering:

  • Legal fees associated with court costs when addressing identity theft
  • Credit monitoring services in case your information was compromised
  • Costs incurred when dealing with ramifications of identity theft such as lost wages, child care and even phone bills

How Much Does Travel Insurance Cost?

Travel insurance rates are generally based on a percentage of the cost of prepaid trip expenses, which can include lodging, airfare for each member of your traveling party, event tickets and more.

A sampling of travel insurance costs include:

  • Standard travel insurance: Costs average between 4% and 10% of the trip.
  • Comprehensive policies such as CFAR: This adds another 40% to 60% of the base travel insurance policy.
  • Supplemental plans: Additional health insurance coverage may cost between $40 and $80.

Pricing may also depend on how comprehensive your chosen plan is or if you must purchase several separate insurance plans. For example, you may be able to combine your travel health insurance policy and extraction/evacuation insurance. You may also be able to cover only the expenses you would lose in a cancellation, such as part of your lodging cost.

But you may not need to break out your wallet at all to get travel insurance coverage if you hold:

  • Travel credit cards: Some credit cards offer a variety of travel protections as perks. As noted above, a common feature associated with credit cards is rental car insurance. Travel rewards credit cards may also offer trip cancellation insurance. Credit card travel perks such as trip cancellation coverage may be offered at no extra cost to the cardholder.
  • Homeowners or renters insurance policies: You may be able to make a claim for lost or stolen luggage through your existing homeowners or renters insurance policies.

Special Travel Insurance Considerations

Some destinations and travel methods require special consideration; you may consider additional insurance options in these cases.

Remote locations: Remote destinations may have different rules for travel. For example, travelers to Antarctica are required to carry emergency airlift evacuation insurance in the case of a medical event.

Cruise ships: One of the most expensive travel upsets is extraction, particularly extraction from a cruise. Being extracted from a cruise ship for a medical reason can cost over $100,000. Depending on the remoteness of the cruise, a helicopter flight in and out can be extremely expensive, and rescue companies will typically only come if paid upfront, so carrying extraction insurance in this case is smart.

COVID-19 health insurance: The COVID-19 pandemic sparked new requirements for health insurance in some cases. Some locations, such as Bermuda, mandate that visitors carry special health insurance that will cover treatment costs for COVID-19 if they get sick during their trip.

Protect yourself on your next trip by investigating and investing in the types of insurance that can keep your finances and your identity safe, including travel insurance, extraction insurance and identity theft insurance. Learn more about how you can qualify for up to $1 million of identity theft insurance with identity theft protection from Experian.

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